When Bharti Cellular decided that it wanted to hire a new media buying agency it called in three companies for the beauty parade. There were two international giants Carat and Group M. The third company was Madison Media owned by veteran Mumbai adman Sam Balsara. The winner: Madison Media.
Or, look at the Rs 40 crore (Rs 400 million) Britannia pitch where four agencies turned up -- Group M, Madison, Initiative and Optimum Media. This time the winner was Group M.
It's a battle that has become a familiar feature in the Indian media buying business. Whenever there's a big account up for grabs Group M and Madison are out there in the forefront of the fight.
The two agencies are suddenly facing off more frequently than ever before. That's because in recent months, there has been a terrific churn in the advertising industry. Since January, according to media audit company Spatial Access, almost 60 clients have reviewed their media agencies. The result is that a whopping Rs 1,680 crore (Rs 16.80 billion) of media business has come up for grabs.
The result? More than 50 per cent of the business was bagged by Group M and Madison Media.
The two agencies couldn't be more different. On one side is Group M, an arm of the globe-straddling WPP. On the other is Balsara's Madison. Balsara is one of the last ditch survivors who is holding out successfully against the international conglomerates that are taking over the top slots in the Rs 10,000 crore (Rs 100 billion) Indian advertising world.
Why are Group M and Madison Media the stars of the show? It is not a David versus Goliath fight but a story of two entities run on different models who have the tools to deliver, says a senior media consultant.
Look at some recent blue chip customers that the two picked up. Madison's plum accounts include Airtel, Marico, Hyundai and McDonald in the last six months. Meanwhile, Group M's three companies -- MindShare, Maxus and Mediaedge:cia -- bagged Britannia, Motorola, ICICI Prudential, HSBC Bank and LML.
The contrast is striking. Group M, which leverages its links with Martin Sorrell's WPP Group, has an added advantage because it has four strong WPP agencies to work with -- J Walter Thompson, Ogilvy & Mather, Bates India and Contract. It is said to have billings of over Rs 3,000 crore (Rs 30 billion).
Still, size isn't everything. Says Saugata Gupta, marketing head of fast moving consumer goods (FMCG) company Marico Industries, which moved its Rs 50 crore (Rs 500 million) account to Madison from Intiative Media: "For us, it was the alignment of values and chemistry which mattered. And with fewer clients, they had a good track record."
"But size definitely does help, especially when it is matched with local knowledge and international systems. Clients say that bringing size to the table ensures cheaper media buys and technological inputs. For us, what matters is not just the media spend but knowing what kind of return on investment we can get. Group M is able to dip into its international pool of services which helps us keep track of our money, says a client who recently crossed floors from a competitor."
Says Andre Nair, CEO, south Asia of Group M, who is credited for the company's consolidated image in India, Just being large is not a benefit to customers. Scale allows us to self invest to a greater degree than our competition, and provide tools for 360 degree offering and service to clients.
Group M walked into India two years ago with Rs 1,600 crore (Rs 16 billion) worth of business with FMCG player Hindustan Lever as its biggest client. At the time, almost all its business came from its own group companies.
Now, according to Ashutosh Srivastava, managing director of MindShare, only one-third of its business comes from affiliated agencies. And industry experts say that Group M' has anywhere between a 40 per cent to 50 per cent share of the estimated Rs 6,000 crore (Rs 60 billion) media buying and planning business.
It is a different story at the suburban Mumbai office of Madison Media. A homegrown outfit, the only thing multinational about it is its client roster. It started 16 years ago as a creative agency. But Balsara, a former vice president of the Reliance Industries-backed Mudra Communications, has taken Madison to the top of the media lexicon.
Their service is leagues ahead of competition and they are able to give you good rates too, says a longstanding Madison client.
And why does Balsara think clients come to him? "I'd like to believe that we are an honest, hardworking media agency focused on delivering value to clients and not focused on our own growth strategy. Our passion is media and we are driven only by our client's bottomline," he says.
Such bravado is understandable. Most of the other media agencies -- Leo Burnett's Starcom, FCB Ulka's Lodestar, Lowe Lintas' Initiative Media, R K Swamy BBDO's Optimum Media Direction (OMD) and McCann's Universal --are byproducts of global mergers and demergers.
In comparison, Madison, owned by Balsara with minor employee stakeholders, with an estimated billings of over Rs 700 crore (Rs 7 billion), has no such links. Its five-year dalliance with DMB&B ended in the late '90s. Our shareholding pattern enables us to pick and choose our business, he says.
That's why, recently, Madison turned down a chance to pitch for the Rs 200-crore (Rs 2 billion) Tata group account along with Rediffusion DY&R's media buying arm -- The Media Edge (TME) and Lodestar.
Balsara said that he had just taken on Hyundai Motors six months ago, and driving yet another auto account (Tata Motors) would have been a conflict of interest.
So in a way, while Madison avoids conflict, Group M manages it. Its three units are strategically poised to take on conflicting clients.
For instance, it is riding on three two-wheeler accounts. MindShare handles Bajaj Auto, Maxus drives Hero Honda while LML rides pillion with Mediaedge:cia. In fact, at a recent pitch, Group M is believed to have claimed that 65 per cent of its business was conflicting.
Ask competitors why Group M and Madison score on pitches, and they understandably take recourse to anonymity. Group M has size so it gets discounts on media buying, and Madison is ready to take a cut on its margins, says the head of a media buying unit.
Says Nair: "You have to buy the right media at the right price. But we are providing consumer insights and have the ability to deliver RoI that is measurable and quantifiable."
Just how competitive the business has become is evident in the way the ad business has changed in the last decade. Traditionally, ad agencies have survived on the 15 per cent commission they earned on creative (the ad campaign) and media (where should the ads be placed and at what rates). With media fragmentation, and advertisers becoming more cost conscious, the media functions were spun off as separate divisions.
As a result, the once sacrosanct commission is now split, with the creative fee being 10 per cent with the balance five per cent divided between the media buying and planning cells. But media experts claim that with competition, and clients not splurging on advertising, the media fee often slides to 2.5 per cent to 1 per cent.
Says Marico's Gupta: "We are all looking for more returns on our media investments. It is not just the rates but how cleverly you buy to reach out to the maximum consumers that matters."
But not everybody thinks that media agencies have their clients' welfare at heart. Says the sales head of a media channel which claims to negotiate with clients directly, "Media agencies are no longer brand custodians, they have become like parking lots waiting for the best possible rebates."
Group M and Madison bosses are not amused by the allegations. Says Balsara, "In fact, media agencies have become bigger custodians of the brand than creative agencies. More presentations reach the managing director's corner room than creative functions."
Even so, there are challenges galore for the media business which is fast becoming a commodity. It has been growing at a steady clip of 9 per cent with a 6 per cent media inflation.
To combat this, both Group M and Madison are expanding into fee-based value-added services. From data analysis to sports and events marketing, they are using all possible tools and technologies to ensure that the client's money is well spent.
Today, 85 per cent of Group M's revenues come from media buying and planning. The rest is from specialist functions. Srivastava says that in the next three years, specialist functions will account for half of GroupM's revenues.
As Nair says, "We must convey to clients that media is not a cost but an investment which can only be done by demonstrating a return on their media investment.
These glitches notwithstanding, the two front runners get ready for another round of media pitches."
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